Among smaller-sized tablets, the iPad Mini that went on sale on Friday boasts a 7.9-inch screen measured diagonally and costs $198 for parts and labor. This 16GB model has a retail price tag of $329, for a profit margin of 40 percent.
The 7-inch offering from Google Inc., the Nexus 7, costs $159 for its 8GB model and sells for $199, according to IHS. That's a profit margin of 20 percent. Google makes a little more on its 16GB model, which costs about $167 to make but sells for $249, for a 33 percent margin.
Amazon.com Inc. spends about $174 to make its 7-inch Kindle Fire HD with 16GB of memory and sells it for $199, for a profit margin of 13 percent. That's better than the original Kindle Fire, a money-loser that, on launch, cost Amazon about $202 for every $199 it collected on a sale.
Google is aiming to both make a profit and broaden the reach of its Android operating system, while Amazon is looking to make up the profit gap when customers buy movies, books and magazines from its store.
"Amazon and Google want to put tablets in consumers' hands — even if it means doing so at a minimal hardware profit," Rassweiler said in a statement.